Perhaps the easiest way to get involved with developing for the military, and a number of other government agencies, is through the Small Business Innovation Research (SBIR) program.

Created in 1982, the SBIR program currently provides $1.6 billion each year to support research and development (R&D) for small businesses across the United States. In short, SBIR makes it possible for smaller companies (those with 500 or fewer employees) to participate in government research grants. SBIR projects cover many topics, including key technologies, and even some high-risk areas. The Department of Defense SBIR awards in 2003 came to almost $900 million.

There are many rules and regulations for participating in the SBIR program beyond being a qualifying business, as listed earlier. There are specific submission formats, and each of the participating department has its own requirements. The following case study touches on some of those issues.

SBIR Case Study: Online Alchemy

Originally founded to create a new type of game engine, the Dynemotion engine, Online Alchemy, an independent game developer in Austin, TX, found that its efforts were of interest to DARPA. Specifically, DARPA expressed an interest in Online Alchemy's work on creating more realistic non-player character (NPC) behavior. Though already working on a commercial game to showcase the Dynemotion engine, the work for the SBIR "dovetailed nicely" with Online Alchemy's efforts and business plan, said Craig Fryar, VP of Online Alchemy. At the time of the interview for this book, Online Alchemy had sent in the last paperwork to complete Phase I of the SBIR.

"When we first looked at SBIR it was daunting," Fryar said. The specification for the project had a broad scope, much broader than any one company could manage. Fryar suspected that the sponsor of the SBIR was trying to "test the mettle" of the companies that responded. Not all SBIRs are like that.

One of the challenges Online Alchemy faced in Phase I was condensing their proposal to the 25-page format (which means exactly 25 pages) required for the SBIR. For people with an engineering background, Fryar pointed out, it can be difficult to fully describe an idea in such a limited space. You have to describe the team, the statement of work, the required resources, and so on, in addition to the actual technology you're proposing and make sure it follows a specific format. Less like a business plan than a technical design specification, the Phase I proposal includes less marketing and financial information and more engineering. The SBIR called for some deviations from the company's game concept, but addressing those deviations, Fryar said, should improve the completed game.

According to Fryar, the government gets a royalty-free license to use the technology developed in the course of the SBIR. Despite this, the ownership of the technology (and the patent on that technology) remains with Online Alchemy. In other words, the U.S. government is providing funding to help Online Alchemy develop its technology in exchange for the right to use it any way the government sees fit.

When the project is completed, Online Alchemy is permitted, and is in fact expected, to use the technology they developed in its own commercial endeavors. It can be used in games or in licensed products created for other purposes. This kind of commercial development is a key part of the SBIR process. The government wants to see ongoing commercial development. In short, Fryar said, "We've received additional funding to help us do what we were doing anyway."

With the time it takes to be accepted for the SBIR, and with award money from the SBIRs coming in installments, game developers interested in pursuing the SBIR program will need to have sufficient funding to carry them for a number of months. It is very important to set aside some money to cover payroll and other expenses in the opening months. This is true of most grant funding programs, not just the military, as we will see in other chapters.

Fryar offers the following advice to developers who are interested in SBIR projects:

• Don't assume your idea for or response to the SBIR is unique. Do your research, possibly including patent searches, and be open to criticism. On the other hand, he said, don't compromise your project (by exposing it to the public or by changing your project to better match the SBIR) just to get the award money.
• Take the time to be certain you understand the intent of the SBIR and its sponsor. If you don't understand the purpose of the SBIR, you could be wasting valuable time and resources.
• Surround yourself with people who have done SBIRs and ask for their advice and feedback. The SBIR Phase I report format is very specific, and having the assistance of someone who has done it before can prove invaluable. Also, there are SBIR-specific dates for submissions and when you can and can't talk with the SBIR sponsor, as well as other possible pitfalls that can trap the SBIR rookie.
• Don't get discouraged. The number of companies who get approved for SBIRs the first time is very small (less than 10 percent). If you want to participate in the SBIR program, you need to learn the process and keep trying.

Further advice for SBIR hopefuls:

• Get help from the SBIR sponsor, though be aware of when you can and can't discuss the SBIR with him or her.
• Don't try to be the answer to the whole SBIR. Focus on what you can do best. SBIR awards are not exclusive. Multiple contracts can be awarded.
• Check in with the SBIR Regional Officer for more information.

In certain cases, if a sponsor is very impressed by your ongoing work or if you propose work on a related topic, the sponsor may even write a customized SBIR for you.

In the world of military contracting, SBIRs are just one possibility. In fact, SBIRs are quite small compared to the huge contracts awarded to the likes of Boeing Company or Northrop Grumman Corporation. However, SBIRs represent a viable first step for newcomers to military contracting, and the contacts gained during the SBIR process may prove invaluable later.